Philip Lance stands in front of the old dilapidated brick building on Wilshire Boulevard and envisions the future: a new charter school that he and a group of community activists are working to establish in this rundown Latino neighborhood near MacArthur Park.

But first, Lance will have to roust the homeless people who have been camping out under the building’s carport and parking their shopping carts a few steps away. On this particular morning, a homeless person is snoozing soundly in his worn sleeping bag. Lance doesn’t have the heart to wake him and tell him to scoot.

The homeless have indeed left their mark at the future school. The sidewalks smell of urine. A torn and dirty mattress is propped up against a building corner.

Come next August, 100 middle-school students in grades 6 and 7 will be filing in for class. In phase two, an 8th grade will be added to the 25,500-square-foot building, the one-time home of an engineering firm that has since moved downtown.

“I saw this building had been empty for years and figured it would be the perfect site for our new school,” Lance said, explaining why he thought the eyesore with the pungent smells could become the new middle school campus for the Camino Nuevo Charter Academy. (The academy’s elementary school opened last fall on a site down the street.)

Lance feels lucky to get this piece of property despite the fact that his community development organization, Pueblo Nuevo Development, had to shell out $88,000 to remove asbestos in the roof and floors, as well as the lead-based paint on the handrails lining the stairs.

Actually, finding a good facility that doesn’t cost a small fortune is the first obstacle in starting any charter school. The next obstacle is raising enough money to remodel the facility in time for classes.

“One of the hardest things in forming a charter school is the way the state legislation reads right now,” said Paul Cummins, president of the Crossroads School in Santa Monica, and an educator who developed the Camino Nuevo curriculum. “Unlike other states, public funds do not provide you with your campus.”

Setting up a charter school is just one of the lofty goals that Lance, an Episcopal priest, set for himself many years ago. His main goal is to redevelop the blighted area near the school at Seventh Street and Burlingame Avenue, a neighborhood pockmarked with dilapidated stores, rundown houses and gang graffiti.

In the early 1990s, Lance founded Pueblo Nuevo Development, a non-profit that started a charitable thrift shop to provide jobs and inexpensive goods for local residents Then he started Pueblo Nuevo Enterprises Inc., a janitorial service employing immigrants in the area.

Lance was attending a social service awards presentation at USC in 1998 when he met the founders of the Accelerated School, a charter school in South Central Los Angeles. He was captivated by the idea.

So the priest went to his board of directors with the idea of founding an elementary school in the neighborhood.Two years ago, they set the ball rolling, raising $1.1 million in grants and borrowing another $900,000 to buy and renovate a small mini-mall..

Camino Nuevo Charter Academy opened last fall with 385 students. But before the elementary school was even open, Lance decided to look for a building on the same block for a middle school. He targeted a building vacated by Martin & Associates more than five years earlier.

Lance at first tried to convince the Martins that they should donate the building to his group. After a period of negotiations, helped along with some fund-raising, the Martins agreed to sell the building to Pueblo Nuevo Development for $1 million.

But before the sale could be completed, Pueblo Nuevo had to have the building analyzed for environmental flaws. The structure occupied a corner lot that in the early 1950s had been home to a gas station. Engineers drilled down five feet to see if there were any flumes of gasoline looming underneath. There was none, but they did find asbestos in the building, which had to be removed.

With the negotiations completed, Pueblo Nuevo has made a $150,000 down payment on the building and construction is scheduled to begin on the first phase of the project May 1.

Now that one hurdle has been crossed, the next step is to find $4 million for the project.

“We are out on a limb a little bit,” said Eric Heggen, an architect at UCLA who is on Pueblo Nuevo’s board of directors. “We have shown we can successfully start a charter school and we hope the money from donations will follow.”